iPhone Strategy Threatens to Fail in Europe

Vodafone and Debitel declare war on T-Mobile

Archive notice: This article was originally published on November 22, 2007. Links and embedded videos are preserved as part of the historical record.

According to industry observers, the legal dispute over the exclusive marketing of the iPhone in Germany by T-Mobile could lead in the medium term to Apple soon finding itself confronted with a failed business model. Despite the temporary injunction obtained yesterday, Tuesday, by competitor Vodafone in order to bring an unlocked version onto the market, sales of the iPhone are continuing, T-Mobile announced. According to its own statements, however, the company reserves the right to examine claims for damages and intends to lodge an objection. Vodafone expects the main proceedings in two weeks to result in T-Mobile abandoning both the SIM lock and the tariff tie-in.

“We are generally of the opinion that competition should be open to all market participants. Apple’s exclusive cooperation with T-Mobile means a monopoly, something that has not existed in this form before. In this respect, we are opposed to the market being closed off to other providers at any point,” Vodafone Germany spokeswoman Marion Stolzenwald tells pressetext. Although Vodafone says it is not seeking a sales stop for the lifestyle phone, mobile provider Debitel is also taking the current proceedings as an opportunity to act. Debitel recently also lodged a complaint with the Federal Network Agency over a violation of the mobile communications licence agreement.

According to analysts at market researcher Gartner, if successful, the current wave of lawsuits could possibly mean the beginning of the general end for Apple’s lucrative exclusive contracts with selected mobile communications providers. “Apple may have to rethink its business strategy earlier than expected,” says Gartner analyst Carolina Milanesi. German telecommunications expert Torsten J. Gerpott, who teaches at the Mercator School of Management, on the other hand, emphasises that “there is no right to the iPhone enshrined in the Basic Law” and that “in a free market economy, companies still decide how and with whom they want to sell their products,” the expert said yesterday, Wednesday, in the Rheinische Post.

For Apple, unlocking the iPhone in Germany presents itself as a threat that could above all weigh on operating earnings. An overturning of the licence agreements would result in the loss of shares in T-Mobile’s revenue. Analysts agree that unlocking the mobile phone could have far greater significance for the European market than for the US market. After all, the uniform European standards allow a mobile phone to be operated on almost any network. Meanwhile, rumours are circulating about the introduction of a UMTS-capable iPhone that is to be introduced in Spain (May 2008) and Austria (2008), reports the industry portal macnews.de, citing the technology blog SevenClick.